Mortgage Renewals

While the majority of Canadians spend a lot of time and effort shopping for their first mortgage, the same is generally not true of their mortgage at the time of renewal. This lack of proper consideration when the mortgage term is up costs Canadians thousands of extra dollars every year. Almost 60% of borrowers simply sign and return the mortgage renewal that is first offered to them by their existing lender without ever shopping around for a more favourable interest rate.

You should never accept the first rate offer from your existing lender. Without any negotiation, simply signing up for the market rate on a renewal is unnecessarily costing the homeowner a lot of money on their mortgage.

It is typically a good idea to start shopping for a new mortgage term about four to six months before your current mortgage term expires. Many lenders send out your mortgage renewal letter very close to the date that your term expires on purpose ~ this does not give you ample time to consider switching lenders. Armed with this knowledge, be sure to be tracking your own mortgage term time-frame and know when it is time to start shopping for a good mortgage renewal rate. As an engaged mortgage broker, I make sure to contact all my existing clients regularly, so that your term expiry never catches you unaware.

Almost all lenders offer a ‘free’ switch or transfer program to new mortgage clients. This means that they cover the expenses of moving your mortgage to them, such as the appraisal and legal/conveyance. This makes it even easier for you to consider a new lender when it comes time to make a decision on your mortgage renewal. Lenders want new business! To qualify, the mortgage terms must not be changing (i.e. you are not borrowing additional funds) and it must be a conventional mortgage (not a line of credit or a collateral charge). There are even a few mortgage lenders that will cover the legal and appraisal even if your situation doesn’t meet this criteria. Contact a licensed mortgage advisor to get additional information.

Your mortgage is probably your biggest expense. It deserves a little effort to find the best interest rates and mortgage terms you possibly can. By shopping around at renewal time you can save substantial amounts of money over the life of your mortgage loan. Don’t be one of the 60% who just simply sign their mortgage renewal letter and send it back. That’s what they’re counting on, and that’s how they increase their bottom-line. They are “banking” on the knowledge that the majority of people, even those with the best of intentions, have busy lives, are complacent or just ‘trust’ their bank. That would be a poor financial decision! Use the services of a licensed mortgage professional to ensure that lenders compete for your business. We can shop for your mortgage renewal for you.